ProAssurance(PRA) - 2025 Q3 - Quarterly Results

Financial Performance - ProAssurance reported net income of $1.4 million, or $0.03 per diluted share, for Q3 2025, a decrease of 91.2% compared to $16.4 million, or $0.32 per diluted share, in Q3 2024[1][7] - Net income for Q3 2025 was $1.446 million, a decrease from $16.441 million in Q3 2024, while net income for the nine months ended September 30, 2025 was $17.545 million compared to $36.575 million in the same period of 2024[19] - Non-GAAP operating income for Q3 2025 was $7.896 million, down from $16.454 million in Q3 2024, and for the nine months ended September 30, 2025, it was $41.474 million compared to $30.426 million in 2024[19] - Non-GAAP operating income for the nine months ended September 30, 2025, was $41.5 million, a 36.3% increase from $30.4 million in the same period of 2024[7][10] Premiums and Underwriting - Consolidated net premiums written were $261.3 million for the quarter, down 6.5% from $279.5 million in Q3 2024, with Medical Professional Liability business contributing over 95% of this segment[5][7] - Specialty P&C renewal premium increases of 8% this quarter are part of a cumulative premium change of over 80% since 2018 in the medical professional liability market[5] - Specialty P&C segment gross premiums written decreased by 5.9% to $229,507,000 for the three months ended September 30, 2025, compared to $244,007,000 in 2024[11] - Workers' Compensation insurance segment net premiums written fell by 6.3% to $43,396,000 for the three months ended September 30, 2025, down from $46,318,000 in 2024[13] - The net loss ratio for the Specialty P&C segment increased to 80.8% in Q3 2025 from 72.5% in Q3 2024[12] - The current accident year net loss ratio for Q3 2025 is 83.2%, an increase of 0.5 percentage points from 82.7% in Q3 2024[26] Investment Income - Consolidated net investment income increased by 8.5% to $40.4 million in Q3 2025, reflecting higher average book yields[5][7] - Corporate segment net investment income increased by 8.5% to $39,342,000 for the three months ended September 30, 2025, from $36,263,000 in 2024[17] - The company recognized net investment losses of $841,000 in Q3 2025, compared to losses of $2.252 million in Q3 2024[19] Ratios and Performance Metrics - The Non-GAAP combined ratio for Q3 2025 was 112.2%, compared to 106.4% in Q3 2024, indicating a deterioration in underwriting performance[5][10] - The combined ratio for Q3 2025 was 112.2%, a decrease from 114.7% in Q3 2024, and for the nine months ended September 30, 2025, it was 108.8%, down from 111.4% in 2024[23] - The underwriting expense ratio for the nine months ended September 30, 2025, is 27.0%, a slight decrease from 27.4% in the same period of 2024[26] - Non-GAAP operating ROE for Q3 2025 is 2.4%, down from 5.6% in Q3 2024[28] Assets and Book Value - Book value per share rose to $25.37 at September 30, 2025, up from $23.49 at year-end 2024[9] - The Non-GAAP adjusted book value per share at September 30, 2025, is $27.14, an increase from $26.86 at December 31, 2024[29] - Total assets decreased slightly to $5.55 billion as of September 30, 2025, from $5.57 billion at year-end 2024[9] Corporate Actions and Future Outlook - The anticipated closing of the transaction with The Doctors Company is expected by June 30, 2026, pending regulatory approvals in several states[4][3] - The company continues to forgo renewal and new business opportunities that do not meet expectations of rate adequacy in the current medical professional liability loss environment[5] - The Corporate segment results for the three months ended September 30, 2025, included pre-tax transaction-related costs of $3,000,000 related to a proposed merger transaction[17] - Transaction-related costs in 2025 amounted to $2.983 million for Q3 and $14.578 million for the nine-month period, primarily related to a proposed merger transaction[19] Tax and Currency Effects - The consolidated effective tax rate for the Corporate segment was 66.9% for the three months ended September 30, 2025, compared to 22.1% in 2024[17] - The effective tax rate applied to adjustments was 21%, consistent for both 2025 and 2024 periods[24] - Foreign currency exchange rate gains for Q3 2025 were $1.003 million, down from $3.849 million in Q3 2024[19] Non-Core Operations - Non-core operations reported an underwriting loss of $3.4 million for Q3 2025, compared to an underwriting income of $0.5 million in Q3 2024[22] Ratings - The company is rated "A" (Excellent) by AM Best, indicating strong financial stability and performance in the specialty insurance sector[30]